After weathering an extremely volatile year, 2021 is expected to bring more stability to the construction industry, but recovery within senior housing is likely to take longer than other sectors as a result of the pandemic’s lingering effects on the sector, according to the latest construction outlook report published by JLL. In addition, both construction labor and material markets have experienced shortages that are driving prices higher — which is likely to increase the costs of new construction and renovation projects within the sector for the time being.

“Construction in senior housing fell sharply during the pandemic and has remained lower than most other sectors, perhaps with the exception of retail and hospitality,” Henry D’Esposito, JLL’s construction research lead, told McKnight’s Business Daily. “We don’t expect that it will start growing rapidly again for the foreseeable future.”

He added, however, that “strong, well-financed projects in quality markets with quality teams will continue to move forward as they have, but the overall volume of projects is going to stay lower than it was over the past few years.” 

One of JLL’s most significant predictions for the construction industry overall is that recovery from the current recession will look very different from the 2008 recovery. 

“In 2008, construction costs were lower for two or three years following the recession, so buyers were able to get some good deals on projects,” Henry D’Esposito, JLL’s construction research lead, told McKnight’s Business Daily. “We are not seeing that same dynamic this time around, mostly because the recession was much quicker to occur and will be shorter.” 

In addition, he noted, the last recession led to a downturn in both nonresidential and residential construction. This time, however, has not been a total construction downturn. In fact, single family residential construction is booming.

“The implications of this growth will be felt across labor markets and material markets, where shortages have reemerged despite being in the middle of a recession,” report authors wrote. “The growth in residential is a primary cause of our forecast for elevated cost inflation in the coming year.”